On Taxes

With the latest tax proposal on its way to the president's desk, I have to pause for a moment and try to view the measure through nonpartisan eyes. There are various levels to the bill, and it should be understood in that way. The immediate and short-term impacts should be taken with a grain of salt, or perhaps a bucket, but what the future holds is arguably more important.

The first point I would like to address is the recent decisions by a few corporations to extend bonuses and increase the wages of many employees. For the life of me, I cannot understand why Democrats are trying to spin this in a negative light. Unless there is something with those moves which I, for the life of me, have neglected to see, thousands of workers seeing increased wages and holiday bonuses should be a cause to celebrate. It shows corporations acting in a way that we wish they more often would, considering their status as people these days.

So what should I, an ostensibly moderate Democrat, think about that? I think it's great. It should be exactly what these businesses do, considering the massive benefits they are about to receive over the next few years. The problem I do have, though, is that I wouldn't wager a nickel on it being the new rule, as opposed to an exception.

Put yourselves in the shoes of this corporate entity. If you are Wells Fargo, Trump recently tweeted that harsh penalties could be imminent, due to their proclivity for questionable mortgage lending practices, to name one infraction. But if you think that a Republican administration, intent on curbing regulation and agencies like the Consumer Financial Protection Bureau, is harsh on Wells Fargo, imagine an Elizabeth Warren?

I don't think the C-suites in Wells Fargo, or AT&T, or Comcast, or pick your favorite billion-dollar company, read A Christmas Carol and suddenly entered Scrooge-like nirvana. No, I think they are doing what they do best in business, and hedging their bets. Look at the RCP trending average for the midterm elections. Even if this number were to drop four points by November, it portends a Democratic wave. With those numbers, the House would likely flip, and the Senate, after an upset in the heart of Dixie, will be tight as ever, if not in the hands of Democrats.

Pair that realization with an historically unpopular president, and the table is set for a very different D.C. in less than a year. This investment in bonuses and minimum-wage hikes is a small price to pay if it might protect against a hostile Congress. And this angle, though somewhat cynical, does not even address the "government merger politics," as Chuck Todd called it (AT&T is facing heavy scrutiny as it attempts to merge with Time Warner). It would take a heavy dose of naiveté to believe the PR stunt by these massive companies was not, to some degree, orchestrated to be concerted with the bill's passage.

Again, I would never say that these are objectively bad moves by the companies. The people receiving the extra benefits undoubtedly deserve them, and it would be politically foolish to criticize them just as a matter of course. Joe Manchin, the centrist Democrat from West Virginia, said in a Politico interview that he and a handful of other Democrats would have been easy pickups, had the bill addressed their concerns in a meaningful way. The bill could have garnered a bit of bipartisan support, but making permanent corporate cuts and temporary individual cuts showed the true colors of the GOP and the constituency they value.

So, these short-term gimmicks, while obvious and beneficial to those affected, will have little impact on all workers writ large. That should not minimize, and I emphasize this again and again, the gain for those whose companies decide to give them benefits. A few kind corporations coming out the day of its passage are not representative of the whole, at least at this point. If, in a few months, every Fortune 500 company has increased wages and doled out bonuses, I will revisit this and own up to it; however, I don't see that happening.

What we do expect to happen, and plenty Republicans, from Paul Ryan to Pat Toomey, have said this, are cuts to government spending. Any economist worth his degree knows this bill will not be revenue neutral, i.e. the government will take in less money than it would otherwise. What does that mean? The debt is going to increase, and that equals cuts. At least today, McConnell seems to have no appetite to address entitlement cuts, much to the chagrin of Speaker Ryan. It seems hard to imagine that the Congress can slash revenue without also addressing Medicare or Medicaid, but as this bill has proven, deficits only matter when the other party creates them.

What McConnell has in mind next year seems to be an infrastructure deal, which might entice Democrats to join in. Up until this point, the GOP has tried to push legislation on a party-line basis, scraping by with their slim majority and often using the Vice President to break ties. If the Republican Leader chooses to pursue infrastructure in the next year, we may yet return to an atmosphere of bipartisanship in Washington. Given McConnell's record, though, and President Trump's unpopularity, I would not hold my breath.